UPDATE: Calhoun upbeat on cash flow despite fifth consecutive quarterly loss

By Bryan Corliss

Oct. 26, 2022, (c) Leeham News: The Boeing Co. posted a loss from operations of nearly $2.8 billion for the third quarter, citing losses on fixed-price defense development programs that offset an overall 4% growth in revenues.

The consensus of Wall Street analysts earlier this week was that Boeing would announce profits of 13 cents a share and would break a streak of four consecutive losing quarters. Instead, Boeing posted a loss of $5.49 a share.

However, in a conference call with stock analysts later in the morning, Calhoun was upbeat, emphasizing Boeing’s positive operating cash flow of nearly $3.2 billion for the quarter.

“This quarter was a big one for us,” he said. “We hit a marker … to generate positive cash flow.”

Boeing booked losses of roughly $1.95 billion on two defense programs, CFO Brian West said: KC-46 tankers and new Air Force One presidential transports. Both are fixed-price contracts for commercial jet conversions that forced Boeing to eat any cost overruns.

“We aren’t embarrassed by them,” Calhoun said. “They are what they are.”

But in an interview with CNBC’s Phillip LeBeau Wednesday, Calhoun said Boeing will not do fixed-price defense contracts in the future. “That is not our intent.”

Summary:
  • BCA: 737 and 787 deliveries resume; engines in short supply
    BDS: ‘Labor instability’ hurts key programs
    Calhoun: Boeing ‘supports China’ but is re-marketing planes
    Read more

Exclusive: No change in Scope Clause in new United pilot contract that would have allowed E175-E2

By Scott Hamilton

June 24, 2022, (c) Leeham News: There is no change to the Scope Clause in the new United Airlines pilot contract governing the number of regional jets that can be operated by regional partners, LNA confirms.

There is also no change in the weight of the aircraft allowed, a blow to Embraer’s hopes for the E175-E2. The E2 is heavier than the E175-E1, which entered service in 2004. Embraer designed the E2 to be used with the Pratt & Whitney GTF engine. The GTF is more economical than the E1’s GE CF34, quieter, and emits fewer emissions. But it is slightly heavier than the Scope Clause contracts permit. The USA is virtually the only market for the E175-E2.

Read more

Pontifications: Horizon’s plan to focus on single fleet type appears a blow to TPNG hopes

March 29, 2022, © Leeham News: Alaska Air Group announced last week that its subsidiary, Horizon Air, will retire 32 De Havilland Canada (DHC) Dash-8-400s by the end of 2023. The regional airline will go to a single fleet type, the Embraer E175-E1. AAG owns some of the 175s. Regional partner SkyWest owns and operates others.

By Scott Hamilton

The plan adds to the struggles of DHC to return to service -400s stored at the start of the COVID pandemic. At the end of 2021, there were more than 150 stored. As of last week, this number was down to 142, according to the ch-aviation data base. Another 17 were in maintenance. There were 398 in service. The number stored represents 25% of the -400 fleet.

Consolidating to a single fleet type doesn’t bode well for Embraer’s efforts to win Alaska/Horizon as a launch customer for its new TPNG. This advanced turboprop, proposed in 70- and 90-seat versions, has engines mounted on pods at the rear in the latest concept shown to the industry. A new engine will replace the aging but reliable Pratt & Whitney PW-series used on the Dash 8 and ATR-42/72. P&W, GE and Rolls-Royce are developing a new generation engine.

Embraer wants to launch the program this year with a proposed entry into service of 2027.

Read more

HOTR: When will Boeing return 737 rates to pre-grounding level?

By the Leeham News Team

March 5, 2022, © Leeham News: When will Boeing return the 737 production levels to the pre-grounding rate of 52/mo?

It’s a question that is of key interest to the industry, employees, and the always-looming investment community. Boeing hasn’t given any guidance beyond the 31/mo target sometime this year. The rate is currently in the low-to-mid 20s.

But if one carefully watches the Boeing supply chain, some of these publicly held companies give information to their own investors in public forums from which one can look at Boeing.

For example, Allegheny Technologies Inc., more commonly known as ATI, gave very specific guidance during its Feb. 17 investors’ day. Seaport Global, a boutique shop, covers ATI and was the first to report the guidance.

“ATI stated that, ‘in line with our customers’ forecasts…when we look at 2025, we see single-aisle going to 127/mo,’” Seaport wrote. In this context, ATI’s customers are Airbus, Boeing, and the three engine OEMs. Airbus is considering an A320 family rate 75/mo in 2025. Simple math says Boeing’s MAX rate will be 52/mo by then. In its note, Seaport was more conservative, predicting rate 47 by 2025.

Read more

Carbon footprint: Regional jet versus turboprop, how large is the difference?

Subscription Required

By Bjorn Fehrm

Introduction

January 27, 2022, © Leeham News: Last week, we kicked off a series of articles where we will measure what difference our choice of flying makes to the primary Greenhouse gas emission, CO2.

We have upgraded our airliner performance model for the series to give a direct output of the CO2 emissions for the flights in different phases.

We start this week by comparing a typical domestic feeder flight of 300 nm, with an example route of Cleveland to Chicago O’Hare. What will be the time differences? And the fuel burn and CO2 emission difference?

To make it a fair comparison, we’ll use present generation aircraft flying on the US market, the Embraer E175 and De Havilland’s DH 8-400. We will fly the DH 8 at a high-speed cruise to keep the flight time differences within 10 minutes.

Horizon Air DH 8-400. Source: Wikipedia.

Summary
  • As expected, the turboprop is the more efficient mode of transportation on the route. It consequently emits less CO2 per transported passenger.
  • With new, more comfortable turboprops in the works, the drive for sustainability could see a return of the turboprop to the US market.

Read more

Boeing, Alaska team for next round of ecoDemonstrator research

By Scott Hamilton

June 3, 2021, © Leeham News: Boeing and Alaska Airlines today outlined a five month ecoDemonstrator program in a series of tests designed to “green up” commercial aviation.

Boeing partnered with airlines and suppliers beginning in 2012. Alaska is the eighth airline to participate. A Boeing 737-9 will be the current platform.

Boeing will flight test 20 technologies and ideas with Alaska beginning June 29 and ending Dec. 2.

Not all ideas fall strictly within “new technologies.” Some are weight-reduction initiatives that aggregate to lower airplane weight, which in turn reduces fuel burn. This in turn reduces carbon emissions.

But other ideas directly go to environmental efforts addressing noise, emissions and now COVID infectious worries.

Read more

Did Airbus miss opportunities with Alaska, Southwest?

Subscription Required

By Scott Hamilton

Introduction

March 22, 2021, © Leeham News: Airbus lost an order from Alaska Airlines, which means the carrier will essentially revert to an all-Boeing fleet.

Alaska Airlines ordered more Boeing 737 MAXes instead of Airbus A321neos. Southwest Airlines appears ready to order the 737-7 MAX instead of Airbus A220-300s. Were these real opportunities? Photo by Boeing.

And despite the apparent high-profile loss of a potential order from Boeing loyalist Southwest Airlines, Airbus is holding its ground in the USA.

Did Airbus miss opportunities to gain ground?

It all depends on how you look at it.

Summary
  • Alaska Airlines chose to eliminate the Airbus A319s and A320s inherited with the 2016 acquisition of Virgin America. It’s not going to retain the orders for A320neos. And it passed on ordering more A321neos when it recently placed a follow-on order for Boeing 737-9s.
  • It looks all but sure Southwest Airlines will pass on ordering the Airbus A220-300 for its sub-150-seat fleet requirement. Boeing looks poised to win a big order from Southwest for the slow-selling 737-7 MAX.
  • Neither outcome, however, was unexpected.

Read more

HOTR: Alaska begins service with 737 MAX

  • Alaska likely to cancel A320neo order. Details below.

By the Leeham News Team

March 1, 2021, © Leeham News: Alaska Airlines today launched its first service with the 737 MAX.

The carrier’s first flight was flight AS 482 from Seattle to San Diego, operated with a 737-9.

Alaska is the fourth US airline to operate the MAX. It is the third to use it in service since the type was recertified in November by the Federal Aviation Administration. American and United airlines returned their MAXes to service earlier. Southwest Airlines followed later this month. The Seattle-based airline hadn’t taken delivery of the MAX before the March 13, 2019 grounding.

Alaska is the second carrier to place a follow-on order for the MAX, after Ryanair, following recertification by the FAA. The MAX 9 will replace Alaska’s remaining Airbus A319/320ceos by 2024. Alaska continues to operate 10 Airbus A321neos and still has 30 A320neos on order, all from its acquisition of Virgin America in December 2016. In its annual 10K filing, Feb. 26, with the Securities and Exchange Commission, Alaska said, “At this time, we do not expect to take delivery of these 30 Airbus aircraft.” Alaska disclosed that $15m in deposits for the A320neo order, made by Virgin America, are “not likely to be recoverable.”

Alaska Airlines Boeing 737-9. Source: Woody’s Aeroimages.

The carrier originally ordered the 737-8. Officials later swapped these orders for the larger MAX 9. Alaska’s 737-900ERs are configured with 178 seats compared with the 737-800’s 159 seats. The advertised range of the MAX 9 is 3,550 statute miles with one auxiliary fuel tank. The tank adds about 270 miles to the range of the base specification.

Boeing doesn’t break out the sales of the MAX sub-types. There are an estimated 250-300 orders for the MAX 9, a “tweener” airplane between the MAX 8 and MAX 10.

Read more

HOTR: Alaska Air still have A320neos on order; working with Airbus on best path forward

Dec. 29, 2020, © Leeham News: Stories and headlines shouted that this month’s Boeing order by Alaska Airlines adding 23 orders and 15 options to an existing agreement meant the death knell for the Airbus fleet.

Alaska indeed announced that all the A319s and A320s inherited from its acquisition of Virgin America will leave the fleet by 2024. But 10 Airbus A321neos remain at least through their lease terms in 2029.

The airline now has 68 Boeing 737 MAX 9s on order and 52 on option.

This is exactly as LNA suggested several times: rotate out the smaller Airbuses as leases expire and keep the larger A321neos.

COVID-19 accelerated the retirement of the smaller Airbus family members by a couple of years. But it never made sense to keep them in lieu of the 737-9 once Alaska committed to this plane several years ago.

But what of the old Virgin America order for 30 A320neos? These are still on the books.

Read more

Alaska Airlines may keep leased Airbus fleet

By Olivier Bonnassies

Airfinance Journal

Oct. 9, 2020, (c) Airfinance Journal: Alaska Airlines is believed to be working on a solution regarding its narrowbody fleet composition after initial talks failed with lessors regarding an early phase-out of Airbus A320-family aircraft.The US carrier approached leasing companies in the summer with a large request for proposals (RFP) to replace its entire leased current-generation A320-family fleet with Boeing 737-800, -900ER, Max 8 and Max 9 models over the next few years.

Alaska Airlines may keep a mixed fleet of Airbus A320s and 737s at least through 2025. Lessors are balking at early returns. Photo: Alaska Airlines.

According to Airfinance Journal‘s Fleet Tracker, Alaska has 10 A319s with leases expiring between 2021 and 2023. Another 41 A320s have leases expiring between 2020 and 2025.

But the objective of the RFP is to accelerate the exit of the carrier’s 51 A320-family aircraft ahead of lease expirations as well as sell 10 owned A320s that were manufactured in 2015 and 2016.

But leasing sources talking to Airfinance Journal say the approach was not “well received”.

“They may keep those aircraft to scheduled redelivery dates,” says one lessor.

Read more